New Data Platform a Unique Opportunity
STORY INLINE POST
Q: What was Zumma Energy Consulting’s business like in 2020?
A: Operating has been quite easy for us. We adapted quickly to the home office structure and addressed priorities for specific projects. We have been able to maintain productivity and have remained in close contact with our clients. Working remotely is a great tool, although we hope to see people in person again this year. Overall, the adaptation has gone very well.
The firm also obtained new clients in 2020. We now have clients that acquired projects before 2020 participating in the market and we have been helping them to ensure the continuity of projects from previous years. We are also seeing more interest from clients regarding the commercialization of energy. Clients in the C&I segment became more interested in more competitive sources of energy as a consequence of the pandemic.
On the downside, some new players that were looking to enter the market last year shifted their priorities and placed their projects on hold. This is understandable. All in all, we have seen a bit of everything and we are hoping that 2021 is less uncertain.
Q: What are the characteristics of the company’s newly launched data platform and how does it benefit clients in Mexico’s energy sector?
A: The platform was made to provide market participants with our data-based analyses of the Mexican electricity market. We realized that the market was not using or understanding all the data relevant or available to the power sector. Using next-generation big data technology, allocated in the cloud, we collated information from various Mexican sector sources in one data room. We divided this into supply, demand, prices and flash reports, which are related to the regulatory updates. The platform is very user-friendly, since it is web-based. The added value lies in its uniqueness, there is nothing like it in the Mexican market. We have seen other platforms come in from Europe and the US, which do a great job of forecasting prices and dealing with international data but we have not seen platforms with information provided by Mexican institutions like CRE, SENER and CFE. The platform also integrates the 500-page national development plan into a simple dashboard, and we can detect where projects and grid infrastructure are needed. If clients have easy access to complex data, they can do their own analysis and better assess commercialization strategies, as well as minimizing the risks of operating in the market.
Q: Where do you think the country’s energy authorities could further improve the availability of data?
A: More data availability and better data updates would benefit for transparency and certainty for the sector. In terms of availability, we need real-time data to monitor the market’s operations, power flows within the grid, and updates concerning participants, permits and energy consumption, all of which have been delayed. We have been requesting information updates and so far, this approach has yielded success, giving us access to newer data than the information being widely reported. After all, we know that the databases exist, but they are simply not available or public yet. Our platform offers a clear, up-to-date picture of the data in the market.
Q: What are the main challenges of the legacy market customers?
A: The legacy market defined as self-supply and cogeneration permit holders is significant in Mexico. We have estimated the market size in approximately 14GW of installed capacity in different technologies, including 410 permit holders serving 4,400 end users from 26,000 registries. The legacy market started in Mexico 20 years ago and used to be the only option for companies other than CFE. It is important to understand what is going on in the legacy segment because the government has put up many challenges in this area with some of the current customers exploring the Wholesale Electricity Market (MEM).
However, transitioning to the MEM requires a thorough economic analysis. Current legacy scheme charges higher wheeling tariffs now, due to recent regulatory updates, but offers other benefits such as the energy bank and no market exposure to congestion risks. Also, breaking these legacy contracts is not that simple: they have long runtimes and high penalties for non-compliance. Nevertheless, there are ways to get out of the contracts and make use of other shorter-term and flexible opportunities in the MEM. Again, all this depends on each particular case. Some legacy customers are satisfied with their current supply contracts, having managed to stay competitive despite the increase in wheeling charges.
Q: What trends in the energy sector do you foresee in 2021 and what will be Zumma’s goals within this time frame?
A: From the demand side, we have seen a great deal of interest in the electricity market. We think that this trend will continue. Furthermore, we have noticed more product offerings in the market. We expect the market to mature and feature more participants, supply, competitiveness and demand from C&I customers. We hope that the present market conditions continue, especially in terms of regulation. We also want to have a clear understanding of what the government’s infrastructure and energy policy priorities are so that we can analyze where the opportunities for project development can be found.
Zumma will also focus on rolling out its new data platform. Our main projects will continue helping C&I players to procure energy and power producers to come off the ground or allocate their energy. Our data platform will make our life a lot easier in this regard.
Zumma Energy Consulting is a Mexican consulting firm focused on the country’s energy sector from a commercial point of view. It uses data analytics to find opportunities to match power generators with end users.